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Student loans forgiven for 800,000 who’ve been paying for years

Most borrowers will soon have their student loans due again soon, but some student loans that have been paid off for years will be forgiven.

WASHINGTON — Karin Engstrom thought she would spend the rest of her life paying off her federal student loans.The 82-year-old was shocked when he logged in to check his balance before the match Payments resume in October and found that more than $175,000 in debt had been eliminated.

She is one of 804,000 borrowers who will receive a total of $39 billion in relief under the one-time adjustments approved by the Biden is suitable for people in Income-driven repayment plan A person who has paid off a loan for 20 or 25 years but never received credit for late or partial payments. It also extended credit to borrowers during a period before the pandemic when borrowers were allowed to suspend or reduce payments due to financial hardship.

To correct the loan servicer’s error, the Department of Education is retroactively adjusting accounts to obtain forgiveness. The department said 95 per cent of those eligible have now been informed of their disqualification.

When Engstrom saw that her balance had been removed, she didn’t immediately believe it, but she eventually found an Aug. 28 letter from the Office of Federal Student Aid confirming that the cancellation was real.

more: I was surprised when some of my student loans were canceled.Yours might be too

“Information: Your student loans have been forgiven,” the letter reads. “Congratulations! The Biden-Harris Administration has fully forgiven the following federal student loans through Edfinancial Services.”

The letter listed two original federal loan amounts — $30,067.45 and $45,729.97 — that are now gone, with accrued interest on more than twice her total.

Like many borrowers now eligible for loan cancellation, she had paid her loans for decades but never received relief due to errors by administrators and servicers.

“I didn’t realize how much of a lift I was going to get,” Engstrom said of the moment of realization. “I thought I would be forgiven when I died.”

Engstrom, who until recently worked as a substitute teacher and teaching assistant, was previously a professional photographer.

“It was a burden,” she said of the debt. “I just couldn’t figure it out. It was just there in the background.”

Patricia Vener-Saavedra, 70, an artist living in Hamden, Connecticut, received more than $88,000 in forgiveness.

“It’s a relief that it doesn’t bother me anymore,” she said, adding that it means “hopefully other people can get away from this.”

She worries about her nephew, though, who wants to attend college part-time, which means he will take out a private loan instead of a public loan.

“He would get himself into a situation that we all want to get out of,” she said.

Weiner-Saavedra said her debt has made it difficult for her to establish credit or get a loan to buy a car in recent years. To get a mortgage, she said she ended up turning to an “unreliable” company and asked her sister to be a co-signer, which affected her sister’s credit.

“Now that my loan is gone, I thought about getting a different mortgage,” she said, “but the interest rates were so high it didn’t make sense.”

The White House said borrowers eligible for disqualification will continue to be contacted every other month through the end of the year as new borrowers become eligible, based on income-driven payment counts. Here is information about cancellations:

Who is eligible for student loan forgiveness?

Borrowers who have made qualifying payments for 20 or 25 years (depending on the repayment plan) are eligible if they hold a Department of Education Direct Loan or Federal Home Education Loan, including borrowers with a Parent PLUS loan.

When will these borrowers receive forgiveness?

The Department of Education said it will continue to notify borrowers who qualify through the end of the year and have their debt forgiven approximately 30 days after the emails are sent. For example, if you receive an email or letter in August, your loan balance should be zero in September.

What if I’m waiting for an updated payment count to determine if I qualify?

The Department of Education said it will continue to update borrowers’ payment counts once their loan cancellations are processed for borrowers who were already eligible for debt relief based on their current payment counts.

Where can I learn more?

this The Official Federal Student Aid Guide to Income-Driven Repayment Adjustments is a great resource for updates.

The Associated Press receives support from the Charles Schwab Foundation to produce educational and explanatory reporting that promotes financial literacy. The independent foundation is independent of Charles Schwab Corporation. The Associated Press is solely responsible for its news coverage.

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